As the Massachusetts property market grows and evolves real estate investors are finding premiums in focusing on developing and leasing niche multifamily housing projects. So what are some of these niches those looking for new acquisitions might find helps them best capitalize on the market
While it seems the only direction for rents and yields is up, there is still a substantial difference in the premiums and spreads achieved. A well-positioned property with a clearly identifiable niche certainly has its advantages in achieving leading yields. With this in mind; here are 5 options to consider…
1. Student Housing
Student housing has begun attracting smart money and investors that see the high available yields, opportunities for elevating this niche with luxury living and amenities, and the advantages of establishing branding earlier in the housing lifecycle. Providing landlords take advantage of professional property management to handle these assets and the sometimes more intensive daily management and maintenance requirements the net income can be far superior to other options.
While many in the real estate industry are still debating and trying to figure out what it is that millennials really want from housing (versus what they are being told they should want), there are ways to cater to them with niche housing. Zillow predicts that 2015 is ripe for a housing boom as millennials grow into become first time home buyers. However, while they might be old enough, be forming families, and be experiencing rising incomes not all are ready to make the commitment, or can obtain mortgages. Cater to millennials’ needs in multifamily rentals and investors can find great returns, while grooming them to move up to their single family home investments, and graduate into investing with them.
It may be another seven years before live-work spaces are blazing hot with developers and amateur real estate investors again. However, this makes now the perfect time for forward thinking investors to establish themselves in this nice and see equity bloom, while income provides yields and steady cash flow. Both Gen. X and Y love this set up, and expect Generation Z to embrace this as the norm.
4. Senior Housing
Senior housing can take on many forms. However, while some might skip apartment renting, student housing, or live-work arrangements; the majority of individuals will end up in some form of senior housing at some point. And we are only living longer. Incredible spreads are being seen in providing luxury assisted living, while there is no question about the huge and urgent need for affordable assisted living too.
5. Multigenerational Housing
Many builders and MA property investors have already begun to neglect this extremely notable trend that emerged out of the crises. Considering the data from NAR, and current fundamentals behind the media fanfare perhaps more should be focusing on this niche. Multigenerational housing may be most obvious in terms of family homes being held on to, but with foreclosures still in the works, and multiple generations of families barred from buying and qualifying for mortgages rental homes which can accommodate them comfortably could be an extremely profitable niche. When you can fit 3 or more generations of even part-time income earners, and even couples into a unit there is great spread and premium potential as well as security. Those willing to brave going against the trend in micro-lofts and apartments might find this a great move.
There are many options for serious MA investors to boosting yields and property value even further if they choose a good niche. If you aren’t sure which is the best direction for your portfolio, or area, talk to a local property management expert that can lend you’re their expertise and data insights.